The dollar remained under pressure for a fourth day on Monday, but backed away from an earlier 20-month low against the euro as comments from France's finance minister cooled last week's lightening euro rally.
French finance minister Thierry Breton said that vigilance would be needed on the dollar's weakening and the euro would be discussed with EU finance ministers later in the day.
The euro was still seen keeping the upper hand, however, having also spiked to a record peak against the low-yielding yen with analysts citing positive sentiment about the euro area's interest rate outlook compared with that of the United States.
"The Ecofin and the comments from the French finance minister may have contributed to a little bit of a more measured tone," said Tim Fox, FX strategist at Dresdner Kleinwort.
"(But) our sense is that the dollar will come under more pressure. We've moved a long way in a short space of time and the interesting aspect is that we are not pulling back significantly at all," he added.
The euro was propelled above the psychological $1.30 level for the first time since April 2005 on Friday by factors including a robust German business survey, concerns about central banks diversifying their reserves away from dollars, and a narrowing US interest rate advantage. The moves were exacerbated by thin liquidity caused by holidays in Japan and the United States on Thursday.
By 1230 GMT, the euro was up 0.2 percent on the day at $1.3115, having spiked up to a 20-month high of $1.3172 in overnight Asian trade as buy orders were triggered.
The euro has now risen nearly 11 percent on the year, having gained around 2 percent since last Wednesday.
"The Friday close above the psychologically important $1.3000 level provides further evidence that the range trading phase is finally over and the euro is primed to rally towards $1.3230/$1.3440/$1.3600 into the year end," technical analysts at Barclays Capital said in a note to clients.
Against the yen, the euro was up 0.3 percent at 152.24 yen after hitting a record peak of 152.51, according to Reuters data. The dollar bounced up to 116.04 yen from a three-month low of 115.40 yen.
Sterling hit a 2-year peak of $1.9465, taking its gains since the start of this year to more than 12 percent. With Breton's comments in mind, market players will look to Monday's meeting of eurozone finance ministers starting at 1500 GMT for further possible comments on the euro's rise.
OECD Secretary General Angel Gurria said on Monday that the euro's strength posed productivity and competition risks for Europe. He added that the dollar could drop further if the US current account deficit remains as high as it is at the moment.
A slew of US data and a speech on the economic outlook from Federal Reserve Chairman Ben Bernanke on Tuesday will also be scanned to see whether the dollar tumbles further or starts to recover, analysts said.